Item 1.01. Entry into a Material Definitive Agreement.
On December 16, 2020, UDR, Inc. (the “Company”), the general partner of United Dominion Realty, L.P., a Delaware limited partnership (the “Operating Partnership”), entered into the Eleventh Amendment (the “Eleventh Amendment”) to the Amended and Restated Agreement of Limited Partnership of the Operating Partnership (the “Partnership Agreement”).
The Eleventh Amendment amends Exhibit H of the Partnership Agreement to set forth the terms of new classes of LTIP Units designated as Performance Units. Matters addressed in the amendment include, among other things, provisions related to allocations, distributions, transfers, conversion to LTIP Units, voting and certain tax matters with respect to the Performance Units.
The description of the Eleventh Amendment set forth herein is qualified in its entirety by reference to the full text of the Eleventh Amendment, which is filed as Exhibit 10.1 to this report and is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Jerry A. Davis. On December 16, 2020, Jerry A. Davis notified the Company of his intention to resign from his position as Chief Operating Officer of the Company, effective on January 1, 2021 (the “Resignation Date”) and of his intention to retire and resign from his position as President of the Company on December 31, 2021 (the “Retirement Date”). Beginning January 1, 2022, Mr. Davis intends to transition to a consulting role with the Company. Mr. Davis has been serving as the Company’s President – Chief Operating Officer since January 2019, and prior to that date he served the Company in a variety of roles beginning in 1989.
In connection with Mr. Davis’ resignation and his retirement and planned transition to a consulting role, the Company and Mr. Davis entered into a letter agreement, dated December 16, 2020, which includes as an exhibit a related release agreement (the “Letter Agreement”), and a consulting agreement (the “Consulting Agreement”).
Under the terms of the Letter Agreement, Mr. Davis will be paid a monthly salary of $32,291.67 in his role as President of the Company and he is entitled to continued group health insurance benefits through December 31, 2027, under certain conditions. Further, under the terms of the Letter Agreement, Mr. Davis will not participate in the Company’s 2021 short-term incentive program or 2021-2023 long-term incentive program. Mr. Davis will be entitled to: (i) the vesting of those equity awards granted to him under the Company’s long-term incentive program that vest for periods prior to January 1, 2022; and (ii) the vesting of his outstanding restricted stock awards on the Retirement Date. Further, if the value of the equity awards described in subsections (i) and (ii) above at the time of vesting is less than $2,000,000, the Company’s Chairman and Chief Executive Officer may, in his sole discretion, award Mr. Davis a cash bonus equal to such difference. The Letter Agreement (including the related release agreement) includes mutual releases and non-disparagement covenants of Mr. Davis and the Company.
The Consulting Agreement will commence on January 1, 2022 and will continue in effect until December 31, 2022, subject to extension by mutual agreement of the Company and Mr. Davis. The Consulting Agreement provides that Mr. Davis will provide consulting services to the Company, and in consideration for such services, Mr. Davis will be paid a monthly fee of $25,000, and will receive reimbursement of expenses incurred in performing the consulting services. The Consulting Agreement includes a non-solicitation covenant of Mr. Davis for a period of 12 months following termination of the Consulting Agreement, a covenant of Mr. Davis to not provide services that conflict with the Company’s business, and a covenant of the Company to indemnify Mr. Davis in connection with his service as a consultant to the Company.
A copy of the Letter Agreement, which includes the related release agreement and the Consulting Agreement as exhibits thereto, is attached hereto as Exhibit 10.2, and is incorporated herein by reference. The foregoing summary of the material terms of the Letter Agreement (including the related release agreement) and the Consulting Agreement does not purport to be complete and is qualified in its entirety by reference to Exhibit 10.2.
LTI Program. In considering the adverse effects of the COVID-19 pandemic on the Company’s performance and our management’s strong leadership in addressing the adverse effects of the pandemic, on December 11, 2020, the Compensation and Management Development Committee of the Board of Directors of the Company (the “Committee”), approved a modification to the Company’s 2020-2022 long-term incentive compensation program (the “LTI Program”).
Our named executive officers, along with other senior officers, are participants in the LTI Program. As discussed in our Proxy Statement for the 2020 Annual Meeting of Shareholders, the LTI Program included four performance metrics (the LTI Program does not include awards based only on continuous service), one of which was based on the Company’s funds from operations as adjusted
